ACT OF APRIL 29, 1802.

An Act to amend the judicial system of the United States.

§ 11. [Being the only part of said act relating to the subject of bankruptcy. In all cases in which proceedings shall, on the said first day of July next, be pending under a commission of bankruptcy issued in pursuance of the aforesaid act, entitled "An act to provide for the more convenient organization of the courts of the United States," the cognizance of the same shall be, and hereby is, transferred to, and vested in, the district judge of the district within which such commission shall have issued, who is hereby empowered to proceed therein in the same manner and to the same effect as if such commission of bankruptcy had been issued by his order.

ACT OF DECEMBER 19, 1803.

An Act to repeal an act entitled "An act to establish an uniform system of bankruptcy throughout the United States."

Be it enacted by the Senate and House of Representatives of the United States of America, in Congress assembled, That the act of Congress passed on the fourth day of April, one thousand, eight hundred, entitled "An act to establish an uniform system of bankruptcy throughout the United States," shall be, and the same is hereby, repealed. Provided, nevertheless, that the repeal of the said act shall in no wise affect the execution of any commission of bankruptcy which may have been issued prior to the passing of this act, but every such commission may and shall be proceeded on and fully executed as though this act had not passed.

Approved, December 19, 1803.

TITLE II.

THE LAW AND PRACTICE OF BANKRUPTCY.

BANKRUPTCY ACT OF AUGUST 19, 1841.

An Act to establish a uniform System of Bankruptcy throughout the United States.1

(Repealed, March 3, 1843, chap. 82.)

SECTION 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there be, and hereby is, established throughout the United States a uniform system of bankruptcy, as follows: All persons whatsoever, residing in any State, District or Territory of the United States, owing debts which shall not have been created in consequence of a defalcation as a public officer; or as executor, administrator, guardian or trustee, or while acting in any other fiduciary capacity, who shall, by petition, setting forth to the best of his knowledge and belief a list of his or their creditors, their respective places of residence, and the amount due to each, together with an accurate inventory of his or their property, rights and credits, of every name,

DECISIONS ON LAWS OF 1841.

1 See notes of the decisions of the courts of the United States on the bankruptcy act of April 4, 1800.

of the circuit Court, under the "Act to establish a uniform system of bankruptcy throughout the United States." Consequently, the points adjourned could not be brought before the Supreme Court on a certificate of division. Nelson v. Carland, 17 Pet. 181; id. 1 How. 265.

An appeal or writ of error will not lie from the decision of the Circuit Court, in a case of bankruptcy adjourned from the District Court. The decision of the Circuit Court is conclusive on the district judge. Ibid.

In the case of Nelson, a petitioner in bankruptcy in the Kentucky district, and Carland, an opposing creditor, several points were adjourned by the District to the Circuit Court. Upon the hearing of the case in the Circuit Court, the district judge, as well as the justices of the Supreme Court, sat in the case; and, being opposed in opinion upon questions adjourned from the District Court, Under the late bankruptcy act of they were certified to the Supreme the United States, the existence of Court on the motion of the counsel a fiduciary debt contracted before of the petitioner. Held; that the dis- the passage of the act constitutes trict judge cannot sit as a member no objection to the discharge of the

kind and description, and the location and situation of each and every parcel and portion thereof, verified by oath, or, if conscientiously scrupulous of taking an oath, by solemn affirmation, apply to the proper court, as hereinafter mentioned, for the benefit of this act, and therein declare themselves to be unable to meet their debts and engagements, shall be deemed bankrupts within the purview of this act, and may be so declared accordingly by a decree of such court. All persons, being merchants, or using the trade of merchandise, all retailers of merchandise, and all bankers, factors, brokers, underwriters or marine insurers, owing debts to the amount of not less than two thousand dollars, shall be liable to become bankrupts within the true intent and meaning of this act, and may, upon the petition of one or

debtor from other debts. Chapman v. Forsyth, 2 How. 202.

A factor who receives the money of his principal is not a fiduciary, within the meaning of the act. Ibid. A bankrupt is bound to state upon his schedule the nature of a debt if it be a fiduciary one. Should he omit to do so he would be guilty of a frand, and his discharge will not avail him; but if a creditor, in such case, proves his debt and receives a dividend from the estate, he is estopped from afterward saying that his debt was not within the law. Ibid.

But if the fiduciary creditor does not prove his debt, he may recover it afterward from the discharged bankrupt by showing that it was within the exceptions of the act. Ibid.

In Kentucky, the creditor obtains a lien upon the property of his debtor by the delivery of a fi. fa. to the sheriff; and this lien is as absolute before the levy as it is afterward. Savage's Assignee v. Best, 3 How.

111.

Therefore a creditor is not deprived of this lien by an act of bankruptcy on the part of the debtor committed before the levy is made, but after the execution is in the hands of the sheriff. Ibid.

This court has no revising power over the decrees of the District Court sitting in bankruptcy; nor is it authorized to issue a writ of prohibition to it in any case, except where the District Court is proceeding as a court of admiralty and maritime jurisdiction. Ex parte Christy, 3 How. 292.

The District Court, when sitting in bankruptcy, has jurisdiction over liens and mortgages existing upon the property of a bankrupt, so as to inquire into their validity and extent, and grant the same relief which the state courts might or ought to grant. Ibid.

The control of the District Court over proceedings in the state courts upon such liens is exercised, not over the state courts themselves, but upon the parties, through an injunction or other appropriate proceeding equity. Ibid.

in

The design of the bankruptcy act was to secure a prompt and effectual administration of the estate of all bankrupts, worked out by the courts of the United States without the assistance of state tribunals. Ibid.

The phrase in the sixth section, "any creditor or creditors who shall claim any debt or demand under the bankruptcy," does not mean only

more of their creditors, to whom they owe debts amounting in the whole to not less than five hundred dollars, to the appropriate court, be so declared accordingly, in the following cases, to wit: whenever such person, being a merchant, or actually using the trade of merchandise, or being a retailer of merchandise, or being a banker, factor, broker, underwriter, or marine insurer, shall depart from the State, District or Territory, of which he is an inhabitant, with intent to defraud his creditors; or shall conceal himself to avoid being arrested, or shall willingly and fraudulently procure himself to be arrested, or his goods and chattels, lands or tenements, to be attached, distrained, sequestered, or taken in execution; or shall remove his goods, chattels and effects, or conceal them to prevent their being levied upon or taken in execution, or by other process; or make any fraudulent conveyance, assignment, sale, gift or other transfer of his lands, tenements, goods or chattels, credits or evidence of debt: Provided, however, That any person so declared a bankrupt, at the instance of a creditor, may, at his election, by petition to such court within ten days after its decree, be entitled to a trial by jury before such court, to ascertain the fact of such bankruptcy; or if such person shall reside at a great distance from the place of holding such court, the said judge, in his discretion, may direct such trial by jury to be had in the county of such person's residence, in such manner and under such directions as the court may prescribe and give; and all such decrees passed by such court, and not so re-examined, shall be deemed final and conclusive as to the subject-matter thereof.

§ 2. And be it further enacted, That all future payments, securities, conveyances, or transfers of property, or agreement made or given

such creditors who come in and New Orleans, In the Matter of prove their debts, but all creditors Christy, Assignee of Walden, rewho have a present, subsisting claim viewed and confirmed. Ibid. upon the bankrupt's estate, whether they have a security or mortgage therefor or not. Ibid.

But this court does not decide whether or not the jurisdiction of the District Court over all the property of a bankrupt, mortgaged or otherwise, is exclusive, so as to take it away from the state courts in such cases. Norton's Assignee v. Boyd, 3 How. 426.

Where the defendant below became a bankrupt, the Supreme Court will not award a supersedeas to stay an execution, because the assignee of the bankrupt has his remedy in the Circuit Court. Black v.

Zacharie, 3 How. 483.

(For bankruptcy act of March 2, 1867, and its amendments, with annotations, see pages 94 et seq.)

by any bankrupt in contemplation of bankruptcy, and for the purpose of giving any creditor, indorser, surety, or other person, any preference or priority over the general creditors of such bankrupts; and all other payments, securities, conveyances, or transfers of property, or agreements made or given by such bankrupt in contemplation of bankruptcy, to any person or persons whatever, not being a bona-fide creditor or purchaser, for a valuable consideration, without notice, shall be deemed utterly void, and a fraud upon this act; and the assignee under the bankruptcy shall be entitled to claim, sue for, recover, and receive, the same as part of the assets of the bankruptcy; and the person making such unlawful preferences and payments shall receive no discharge under the provisions of this act: Provided, That all dealings and transactions by and with any bankrupt, bonafide made and entered into more than two months before the petition filed against him or by him, shall not be invalidated or affected by this act: Provided, That the other party to any such dealings or transactions had no notice of a prior act of bankruptcy, or of the intention of the bankrupt to take the benefit of this act. And in case it shall be made to appear to the court, in the course of the proceedings in bankruptcy, that the bankrupt, his application being voluntary, has, subsequent to the first day of January last, or at any other time, in contemplation of the passage of a bankrupt law, by assignments or otherwise, given or secured any preference to one creditor over another, he shall not receive a discharge unless the same be assented to by a majority in interest of those of his creditors who have not been so preferred: And provided also, That nothing in this act contained shall be construed to annul, destroy or impair, any lawful rights of married women, or minors, or any liens, mortgages, or other securities, on property, real or personal, which may be valid by the laws of the States respectively, and which are not inconsistent with the provisions of the second and fifth sections of this act.

§ 3. And be it further enacted, That all the property, and rights of property, of every name and nature, and whether real, personal or mixed, of every bankrupt, except as is hereinafter provided, who shall, by a decree of the proper court, be declared to be a bankrupt within this act, shall, by mere operation of law, ipso facto, from the time of such decree, be deemed to be divested 'out of such bankrupt, without any other act, assignment or other conveyance whatsoever; and the same shall be vested, by force of the same decree, in such assignee as from time to time shall be appointed by the proper court for this purpose, which power of appointment and removal such court may exercise at its discretion, toties quoties; and the assignee so appointed shall be vested with all the rights, titles, powers and authorities to sell, manage and dispose of the same, and to sue for and defend the same, subject to the orders and directions of such court, as fully, to all intents and purposes, as if the same were vested in or might be exercised by such bankrupt before or at the time of his